Many retailers, both of the online and brick and mortar variety, offer consumers gift cards as a way to shop or give money to friends. There are two types of gift cards: physical and digital, each of which comes with a variety of features and benefits. Amazon allows consumers to purchase physical cards as well as to load online or digital accounts. These digital accounts have features that allow users to print gift cards from home computers, and then redeem them at brick and mortar outlets and spend the balances online.
Amazon and Applebee’s both allow consumers to buy physical cards at retail locations and online as well as to purchase digital gift cards, which may be redeemed online or printed at home into usable gift cards. Many other retailers offer similar programs.
Overall, gift cards may be good for those who are concerned with losing cash. Digital gift cards aren’t generally replaceable, but they are very difficult to lose. Physical gift cards usually need to be registered in order to provide a level of protection in the event of loss. Once they are registered, most are easily replaced.
The cards are useful for controlling and monitoring the spending of younger shoppers by limiting amounts and restricting the locations where the card may be used. They also make great gifts.
A problem common to all gift cards purchased in denominations is that after purchases are made there may be small balances left, which consumers either forget about or can’t be bothered to use. Retailers have recognized this trend and used it to get extra value out of gift cards. This benefit in addition to the convenient aspects the cards provide and the fact they allow retailers to get paid sooner all serve as an incentive for companies to expand their gift card programs. Consumers are advised to keep track of their money and investigate gift cards carefully.
Most gift cards do not have time limits. Some allow consumers to reload, which means this “wasted-small balance” aspect of gift cards is not present. However, there are often fees associated with transactions like this. Reloadable cards are more likely to carry monthly charges as well.
There are several cards offered by prepaid credit card companies that offer consumers the ability to buy cards and reload them at retail locations. The PayPal Prepaid MasterCard allows users to easily transfer money between their PayPal account and a physical card that can be used anywhere that MasterCard is accepted.
Prepaid credit cards, debit cards and gift cards that are reloadable generally offer better value than retailer-specific gift cards. However, the fees associated with prepaid credit cards, as well as the benefits, are generally not as favorable as traditional credit cards. Prepaid credit cards do not typically offer travel rewards or car insurance coverage, as traditional credit cards do.